RADIAL AND NONRADIAL MEASURES OF TECHNICAL EFFICIENCY - AN EMPIRICAL ILLUSTRATION FOR BELGIAN LOCAL GOVERNMENTS USING AN FDH REFERENCE TECHNOLOGY

This paper serves two purposes. First, we argue that radial efficiency measures are inappropriate for the Free Disposal Hull (FDH) technolog y, and we provide a comparative analysis of alternative nonradial meas ures. In particular, using information on Belgian local government exp enditures and output indicators we implement various radial and nonrad ial measures on the FDH reference technology, and we investigate to wh ich extent these efficiency measures imply different distributions and rankings. Second, we analyze the patterns of measured technical effic iency implied by the various indices. Specifically, we investigate whe ther different measures make any substantial difference for the explan ation of the calculated inefficiencies. The empirical results suggest that more important differences in rankings exist between radial and n onradial measures than between different nonradial alternatives; moreo ver, the radial and the nonradial efficiency measures do yield a somew hat different pattern of explanation.